The majority of industries approved by the department are small-scale industries. The DoI approved 166 small-scale industries, 22 medium-level, and four large-scale industries in the current fiscal year.
The service sector topped the chart in terms of FDI pledges. According to DoI, 45 percent of the registered industries are in the service sector category. The tourism sector is the second most preferred sector with 36 percent of industries registered in this category. Government officials point out the global economic downturn and the tightening of visa rules for foreign investors by the Nepal government for the decline in FDI pledges. "The FDI flow has decreased not only in Nepal but globally," said a DoI official. Nepal falls among the countries that receive the lowest FDI in the world. Despite many talks on attracting FDI in the country, the country has failed to attract foreign investors as expected. In November last year, the government lowered the minimum threshold for FDI to Rs 20 million from Rs 50 million to attract even the small foreign investors in the country. While the decision is expected to encourage FDI in the information and communication sector which does not need big investments in physical infrastructure, not many foreign investors have pledged to invest in this sector so far. FDI inflow declined this fiscal mainly due to a slowdown in investment commitment from China. The investors from the northern neighbor have been committing the largest amount of FDI in the last several years to Nepal. With China facing economic problems due to renewed Covid-19 crisis, and supply chain disruptions, investment pledges from the northern neighbor have also been affected. Tightening the visa rules for foreign investors, DoI in November last year, decided to recommend business visas for foreign investors only for three months at a time. As per the new rules, the department now recommends a business visa for three months by which time the investor has to submit a certificate of company registration. After the registration certificate has been received, DoI will recommend an extension of the business visa for another three months. Within this period, investors need to submit proof of having registered at the tax office and opened a bank account. However, DoI officials claim the new provision has helped in the screening of genuine foreign investors and that the results have been seen as reduced FDI pledges. Month wise FDI commitment
Month | 2021/22 | 2022/23 |
Shrawan | Rs 5.535 billion | Rs 2.649 billion |
Bhadra | Rs 6.32 billion | Rs 3.446 billion |
Ashoj | Rs 11.965 billion | Rs 1.854 billion |
Kartik | Rs 0.98 billion | Rs 3.65 billion |
Mangsir | Rs 5.151 billion | Rs 0.808 billion |
Poush | Rs 0.612 billion | Rs 4.852 billion |
Magh | Rs 0.539.5 billion | Rs 1.39 billion |
Falgun | Rs 2.023 billion | Rs 1.929 billion |
Chaitra | Rs 1.802 billion | Rs 7.551 billion |
Total | Rs 34.388 billion | Rs 28.129 billion |